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Large technology companies are snapping up artificial-intelligence startups at a breakneck pace. These two have the greatest number of acquisitions in the space.

Market-intelligence firm CB Insights has compiled a list of the major acquirers of private artificial-intelligence (AI) companies over the last five years. This list reveals well-known tech giants making large investments to increase their capabilities in AI. It also provides insight into the evolution of the technology, and its direct uses.

The acquisition of Emu provided an assistant that used voice commands to schedule appointments, set reminders, and make reservations. Api.ai added tools for building conversational bots, while Dark Blue Labs contributed natural-language improvements. Two companies helped personalize recommendations: Clever Sense learned about nearby coffee shops, restaurants and bars; Jetpac searched for visual cues in photos to improve recommendations. Timeful used priorities to add items to a calendar using smart scheduling.

Three companies specialized in image recognition: DNNResearch focused on image search and facial recognition; Moodstocks technology improved image recognition for smartphones; Vision Factory worked to enhance accuracy and speed in object recognition. Each of the aforementioned technologies serves to improve specific functions in Google Home's ecosystem, and specifically within Assistant. This will compete directly in the virtual personal assistant market currently led by Amazon's Alexa.

London-based DeepMind was one of the largest acquisitions, with a price tag estimated at $660 million. Google already boasted a significant investment in the area with its development of the Google Brain, a neural network developed in-house. Gains in AI research have been used to improve many areas of its current business. DeepMind is focused on improvements in general AI research, without any specific business objectives. That said, Google will use every opportunity to apply research gains to business uses.

Intel will take the fight to NVIDIA

Intel(NASDAQ:INTC) has made a number of acquisitions as well. Saffron specialized in cognitive computing, combining data analytics with deep learning; this relates directly to Intel's efforts in the same area. Indisys provided natural-language recognition, gesture recognition, and virtual-assistant technologies, but also created user interfaces for unmanned drones. Itseez focused on software for the Internet of Things (IoT), cameras, drones, and autonomous driving. Movidius brought computer-vision hardware for drones and cameras; it also provided system-on-a-chip (SoC) technology for accelerating computer vision, as well as deep-learning capability. These companies integrate directly into Intel's RealSense brand for drones and virtual reality, and bolster its IoT business.

The most significant of Intel's acquisitions, however, may be that of deep-learning start-up Nervana Systems. With a reported price of $408 million, this company is attempting to reduce machine learning to the size of a computer chip. Intel competitor NVIDIA(NASDAQ:NVDA) has seen its stock price triple in 2016, as its graphics processing units (GPUs) become the chip of choice for companies training AI systems. If Intel can succeed at reducing machine learning to a level that could reside on a processor, that would be a significant boost to its business and a potentially troubling development for NVIDIA.

As the battle for AI supremacy continues, we will likely see more consolidation in the industry, as tech giants try to gain an edge in this nascent technology. Success in the field will likely depend on successful integration of these acquisitions into existing business lines. Alphabet and Intel are on the right track.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Alphabet (A shares) and Amazon.com. Danny Vena has the following options: long January 2018 $640 calls on Alphabet (C shares), short January 2018 $650 calls on Alphabet (C shares), and long January 2018 $25 calls on Intel.

The Motley Fool owns shares of and recommends Alphabet (A and C shares), Amazon.com, and Nvidia. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.

Author

Daniel W. Vena, CPA, CGMA is long-term investor searching for intangibles that provide explosive growth opportunities in his investments. He served on active duty with the US Army and has a Bachelors degree in accounting.
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